No Limits Group Announces New Business Model in Canada
Earlier today, the No Limits Group announced to their staff and partners that they were making some significant changes to their current distribution model. As of 2018, No Limits Group will no longer be representing brands in Canada under a traditional distribution model and will pivot certain brands to a new hybrid model to assist them with sales, marketing and fulfilment to build out their presence in Canada. Beginning in 2018, No Limits Group will no longer be taking an inventory position with third party brands. They will in essence, assist brands to “go direct” in Canada, along with their fulfillment partner, A52 Warehouse (a subsidiary of No Limits Group).
We had a chance to chat with Paul McCurry, Managing Partner & CEO, about this new model and what it means to the No Limits Group, their brand partners and retailers.
Q: Hey Paul, can you please explain what was the key issue that precipitated this decision?
A: Absolutely. While it was a very difficult decision to wind-out of traditional distribution, which No Limits has been involved with since 1993, we are focussed on building Saxx Underwear Co. We acquired Saxx in 2010 and have experienced tremendous success building out North America. Moving away from third party distribution allows us to focus our resources on the continued growth of Saxx, which will see further penetration in the US market as well as Internationally.
Q: Can you please explain the new business model that the No Limits Group will be entering in beginning 2018?
A: As you know, we’ve been involved in third party logistics through A52, both providing pick and pack services for our distributed brands and Saxx, but also for a number of other highly successful brands operating in Canada through a direct model. Our hybrid services will be an extension of this, providing current brands with services in Canada to facilitate a transition into a direct model. In addition to the warehouse fulfillment function, this will include oversight of the sales teams & marketing initiatives in Canada, on behalf of the brands.
Q: So, as far as the business goes, it will be business as usual for the remainder of 2017?
A: Yes, we will continue to sell-in remaining 2017 seasons and bring in the goods to fulfill customer orders.
Q: How will this change impact the staff at the No Limits Group?
A: For the most part, there is very little change as a majority of our staff in our Vancouver office have already been focussed on Saxx and so they will continue with No Limits Group. For those sales & marketing related staff only focussed on third party brands, we are doing what we can to find other opportunities for them within our group (at Saxx or A52) including involvement in the hybrid model.
Q: It sounds like the brands that you work with will have a decision to either work with you or explore other options for the Canadian market?
A: Rather than simply providing notices to our brands, we decided to provide them with options. So for some brands that aren’t quite ready for going direct, we have already organized transition plans to other Canadian distribution partners. And for those that were ready, we are in active discussions on how exactly the hybrid model will work for 2018.
Q: This change in focus for you is obviously a signal about a larger issue that is facing distributors in Canada. Can you comment on what lead you to this change in business beyond your focus on Saxx?
A: No Limits entered into third party warehousing back in 2007 because we saw the growing trend in brands moving directly into Canada. The perception by many US brands is that it is simply easier to go direct in Canada given the close proximity and continued growth in Ecom. To some extent that is true especially compared to 15 years ago, but Canada is a different landscape from the US and there is still a need for third party distributors because of the complexities unique to Canada. Our experience with US brands is that Canada can become a significant distraction to manage, often resulting in senior management taking their eye away from strategic initiatives back home. Nevertheless, many brands choose to go direct because of the perception that it’s easy. However, the USD:CAD exchange rate plays a significant factor in the economic model making it difficult to price competitively in Canada while generating a reasonable return on investment. We simply had an economic choice to make on where to most effectively deploy our resources. Still a tough decision…
Thanks Paul! Good luck!